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The global financial crisis and a new capitalism?

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  • Luiz Carlos Bresser-Pereira

Abstract

The 2008 global financial crisis was the consequence of the process of financialization, or the creation of massive fictitious financial wealth, that began in the 1980s, and of the hegemony of a reactionary ideologyânamely, neoliberalismâbased on self-regulated and efficient markets. Although laissezfaire capitalism is intrinsically unstable, the lessons from the stock market crash of 1929 and the Great Depression of the 1930s were transformed into theories and institutions or regulations that led to the "30 glorious years of capitalism" (1948-77) and that could have avoided a financial crisis as profound as the present one. It did not because a coalition of rentiers and "financists" achieved hegemony and, while deregulating the existing financial operations, refused to regulate the financial innovations that made these markets even more risky. Neoclassical economics played the role of a meta-ideology as it legitimized, mathematically and "scientifically," neoliberal ideology and deregulation. From this crisis a new democratic capitalist system will emerge, though its character is difficult to predict. It will not be financialized, but the tendencies present in the 30 glorious years toward global and knowledge-based capitalism, where professionals will have more say than rentier capitalists, as well as the tendency to improve democracy by making it more social and participative, will be resumed.

Suggested Citation

  • Luiz Carlos Bresser-Pereira, 2010. "The global financial crisis and a new capitalism?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 32(4), pages 499-534, July.
  • Handle: RePEc:mes:postke:v:32:y:2010:i:4:p:499-534
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    References listed on IDEAS

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    Cited by:

    1. Fontana, Olimpia & Godin, Antoine, 2013. "Securitization, housing market and banking sector behavior in a stock-flow consistent model," Economics Discussion Papers 2013-13, Kiel Institute for the World Economy (IfW).
    2. Suleymanov, Elchin & Alirzayev, Elvin, 2013. "Government Role During The Global Financial Crisis," MPRA Paper 51592, University Library of Munich, Germany, revised 18 Nov 2013.

    More about this item

    Keywords

    deregulation; financial crisis; financialization; neoliberalism; political coalition;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • P1 - Economic Systems - - Capitalist Systems

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